Did the party exercising undue influence receive a benefit ?
49 ** Additional
Susilawati v American Express Bank Ltd (2009) 50 1998 and 2005 : incurred substantial debts to Amex (through forex trading losses and loans from Amex). 2006 : Debt ballooned to US$17.4m. 1998 : Pledged over all the $$ in her account, in favour of Amex. The pledge relates to Tommy’s debts to Amex. 2005 : Claimed undue influence by Tommy , resulting invalid pledge. Tommy, son-in-law Wealthy Indonesian matriarch Owes $$ to Amex ** Additional
Susilawati v American Express Bank Ltd (2009) • This principle can be relevant to a business in the following way as happened in the case above: Eg: Bank gets X to mortgage his property for the debts of Y. • If there is “undue influence” between Y and X, in some circumstances (eg: it is a non-commercial transaction and X does not appear to benefit on the face of it ) – the bank may be imputed with it and the transaction may be set aside. 52
4. DURESS 53
DURESS • One form of duress: where a person is forced to enter into a contract because of: • violence ; or • threats of violence . Source: Microsoft clipart 54
ECONOMIC DURESS • Another form of duress is known as economic duress . • Economic duress relates to unlawful commercial pressure exercised by one business on another . • What amounts to unlawful commercial pressure depends on many factors such as : Was the innocent party left with no choice? Did the innocent party agree under protest? Was there lack of good faith on the part of the party exercising the pressure? Source: Microsoft clipart 55 See example on next slide >>
56 It had a choice. It did not protest. It didn’t act in good faith. It had applied to the project consultants for more time to complete the project. So it did have time to find alternatives.
CONSEQUENCE OF DURESS • If duress is made out, the contract/changes can be set aside/undone. Source: Microsoft clipart 57
5. MISTAKE 58
Overview of MISTAKE (no need to remember the categories) just be aware of the different ways in which mistake can occur MISTAKE 1. Common Mistake 2. Mutual Mistake 4. Non est factum 3. Unilateral Mistake 59 ** Additional
1. Common Mistake • A agrees to sell car to B; B accepts. • Car was actually destroyed while they were negotiating. 2. Mutual Mistake • A offers to sell his Toyota. • B accepts what he thinks is A’s offer to sell a Nissan. 3. Unilateral Mistake • A offers to sell his Toyota. • B accepts what he thinks is A’s offer to sell a Mercedes. • A is aware of B ’ s mistake. Examples 60 ** Additional
4. Non-Est Factum • An old, illiterate woman was brought by her son to the bank • He told her that she was signing a confirmation of her mother-son relationship. • In actual fact, the document was a mortgage over her house. Her son had taken a loan from the bank which required a mortgage as security. 61 Examples (cont’d) ** Additional
MISTAKE • Generally, it is difficult to set aside/undo a contract on the basis of a mistake.
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